Let c be consumption. Under what conditions on the parameters 0 and 1 could the following functions

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Let c be consumption. Under what conditions on the parameters λ0 and λ1 could the following functions serve as utility functions for a risk-averse investor? (Remember that marginal utility must be positive and the function must be concave.)
a. U(c) = λ0 exp (λ1c)
b. U(c) = λ0cλ1
c. U(c) = λ0c + λ1c2
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Derivatives Markets

ISBN: 9789332536746

3rd Edition

Authors: Robert McDonald

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